Knowledge Hub

<p dir="ltr"><span id="docs-internal-guid-3fef93dd-7fff-650d-4fa5-fabb8d141577">One would have often read a standard disclaimer for investing in mutual funds, &ldquo;</span>past performance is not a guarantee for future returns.&rdquo; This disclaimer tends to emphasise the fact that the historical returns generated by mutual funds may not be repeated in future periods. When one is investing in equity markets, one may not expect linear returns, and the returns may be volatile.

KYC stands for 'Know Your Customer' and is one of the obligations every investor must fulfil before investing in mutual funds. Through the KYC process, the market participants fetch relevant records of the investors to establish a unique identity for the investors in the mutual funds' records. 

<p dir="ltr"><span id="docs-internal-guid-213348f3-7fff-2b85-30c4-677af3324ae1">It is often said, &ldquo;</span>one should not put all his eggs in one basket.&rdquo; Experts suggest investors must spread their investments across different asset classes, e.g., equity, debt, real estate, etc. Different asset classes have different risks and rewards associated with them, and it becomes crucial for the investors to balance the risk-reward trade-off to smoothen their investment journey.

The Hon’ble Finance Minister presented the Union Budget 2020 on 1st February 2020, which has proposed specific changes to the present income tax rates, which will be applicable for the financial year 2020-21 and subsequently, Finance Act 2020 has also been enacted. However, the new tax rates carry certain caveats before the taxpayers can adopt the reduced rates. As such, both the existing & new tax rate structures will continue to co-exist. 

<p dir="ltr"><span id="docs-internal-guid-9a859db7-7fff-214b-eea0-4ebc228a88fa">Don&rsquo;t let this be a singular moment in time. I think it&rsquo;s a lesson of a lifetime. You get to read about such situations only in books or get anecdotal references when someone talks about tough times. Having lived through this lockdown many of you will have a chance to build lives which use this experience as foundational base. Post this experience, like every moment in time we will get two paths going forward.

Mutual funds are steadily emerging as one of the most preferred investment products amongst the retail investors for the benefits they bring on the table, including professional fund management at lower costs, diversification, preferential taxation rates for equity funds, etc. However, it is crucial to stay committed to the investment philosophy at all times. 

<p dir="ltr"><span id="docs-internal-guid-89bd439b-7fff-a711-d50c-46b48a940124">The post-retirement phase of life is generally seen as &lsquo;the second innings&rsquo; wherein one intends to fulfil their dreams and aspirations, which could not be fulfilled earlier due to commitments. Post-retirement, it is natural that people have reduced income. So, it is paramount to plan well for retirement so that the pending dreams do not face financial constraints.&nbsp;</span></p>

A Systematic Withdrawal Plan (SWP) is an investor-friendly measure that allows the investors in mutual funds to withdraw funds periodically. As such, one may enjoy the benefits of wealth accumulated in the past through periodical redemptions. Thus, SWP aims to achieve precisely the opposite of what Systematic Investment Plans (SIP) offer.

When it comes to saving from different financial goals, one can choose from a wide range of investment options. Such options may include traditional investment products like Unit Linked Insurance Plan (ULIPs), endowment insurance policies, etc. With the evolution of the financial markets, mutual funds have emerged as an investment option for wealth accumulation and wealth creation. 

<p>Large cap mutual funds invest a minimum of 80% of their net assets in&nbsp;large-cap companies, generally referred to as&nbsp;blue-chip companies. Whereas,&nbsp;mid-cap companies&nbsp;must invest at least 65% of their net assets in mid-cap stocks.</p>